- The US dollar has gained strength due to concerns about global economic growth due to President Trump's tariffs, and the EUR/USD pair has been swinging around 1.0400.
- ECB President Lagarde advised that Europe should prepare to respond to President Trump's tariff hikes.
- The Fed and ECB are scheduled to announce their first monetary policy decisions of 2025 next week.
In North American trading on Thursday, EUR/USD fell to near 1.0400 as the US dollar (USD) strengthened. The U.S. Dollar Index (DXY), which tracks the dollar's value against six major currencies, has extended its recovery to around 108.40 from a two-week low of 107.75 hit on Wednesday. The dollar rebounded as market sentiment became slightly more cautious as investors assessed the impact of President Donald Trump's tariffs on economic growth.
President Trump has threatened to raise tariffs of 25% on Canada and Mexico and 10% on China, effective February 1st. It also plans to impose tariffs on Europe, accusing European countries of being “very bad for us.” President Trump's approach to raising tariffs appears to be slower than market participants expected. However, it will still be detrimental to global economic growth.
On Wednesday, European Central Bank (ECB) President Christine Lagarde said on CNBC that President Trump's decision not to impose tariffs quickly was a “sensible approach” because a blanket tax would not necessarily bring “the desired results.” Lagarde warned Europe. President Trump's tariffs will be “selective” and “intensive,” so the United States must “anticipate what will happen” and “prepare to respond.”
Daily Digest Market Trends: EUR/USD trades sideways as investors await preliminary PMI data from Eurozone and US
- EUR/USD was range-bound on Thursday, with investors focused on Friday's preliminary Eurozone private sector figures and US Purchasing Managers Index (PMI) data for January. The Eurozone HCOB PMI report compiled by S&P Global is expected to show that overall business activity continues to contract, but at a slower pace. HCOB Composite PMI is expected to rise slightly to 49.7 compared to December's 49.6.
- As for the United States, economists expect overall business activity to expand at a roughly steady pace. Manufacturing activity is estimated to have contracted again, but at a slower pace. Meanwhile, activity in the service sector is expected to expand moderately.
- Investors should also brace for significant volatility next week as the Federal Reserve and ECB announce their first monetary policy decisions of the year. The Fed is likely to keep interest rates in the 4.25% to 4.50% range, according to the CME FedWatch tool. Meanwhile, traders are fully pricing in a 25 basis point (bp) rate cut by the ECB.
- Traders also expect the ECB to cut deposit facility rates at its next four policy meetings. ECB policymaker and Finland's central bank governor Olli Rehn said on Wednesday that he was confident that “inflation will stabilize at the target as expected” and that monetary policy will “become less restrictive” in the near future. However, he refrained from endorsing market expectations, insisting that policy decisions would be made on a meeting-by-meeting basis.
today's euro price
The table below shows the percentage change of the Euro (EUR) against the major listed currencies today. The euro was the strongest against the Swiss franc.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.10% | 0.09% | -0.05% | 0.14% | 0.15% | 0.16% | 0.15% | |
| EUR | -0.10% | -0.02% | -0.16% | 0.04% | 0.04% | 0.03% | 0.05% | |
| GBP | -0.09% | 0.02% | -0.15% | 0.05% | 0.06% | 0.07% | 0.06% | |
| JPY | 0.05% | 0.16% | 0.15% | 0.18% | 0.21% | 0.17% | 0.19% | |
| CAD | -0.14% | -0.04% | -0.05% | -0.18% | 0.02% | 0.02% | 0.00% | |
| australian dollar | -0.15% | -0.04% | -0.06% | -0.21% | -0.02% | 0.00% | -0.01% | |
| new zealand dollar | -0.16% | -0.03% | -0.07% | -0.17% | -0.02% | -0.01% | -0.01% | |
| swiss franc | -0.15% | -0.05% | -0.06% | -0.19% | -0.01% | 0.01% | 0.00% |
The heat map shows the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select EUR from the left column and move to USD along the horizontal line, the percentage change displayed in the box represents EUR (Basic)/USD (Quote).
Technical analysis: EUR/USD retreats from 1.0460
EUR/USD has struggled to extend its recovery above near-term resistance at 1.0460, which started from the two-year low of 1.0175 on January 13th. Major currency pairs rallied after a divergence in momentum and price action. The 14-day relative strength index (RSI) formed a higher low, while the pair formed a lower low.
The short-term outlook for the common currency pair is improving as it remains above the 20-day exponential moving average (EMA) trading around 1.0360. On the other hand, the long-term outlook remains bearish as the 200-day EMA is trending down at 1.0700.
On the downside, the January 13th low of 1.0175 will be a key support zone for the pair. On the contrary, the psychological resistance at 1.0500 will be an important barrier for euro bulls.
